Imagine owning a business where there is no physical product, no customer returns, and you don’t even have to come into contact with your customers. Welcome to the world of online casino gambling. The real surprise is you don’t need to be a billionaire, or even a millionaire, to launch your own online casino site.
The good news is that casino platforms offer “turnkey” casino solutions to people with money to invest. Turnkey means that not only is a casino produced ready for you to market, but they will take care of most operational aspects. Your responsibility will be to have a plan for generating traffic and the funds to do so. It does help if you understand how to generate traffic online, but if you don’t, fear not, it isn’t very complicated and we will explain that a bit later.
Working with a turnkey gambling platform isn’t free of course. If you want to maximise your margin, then you are better off launching your casino on a platform that isn’t turnkey, but then you will need to hire a much bigger team and be taking into consideration a whole host of factors that are extremely important in running a successful operation. Your starting budget is all of a sudden much larger. Nevertheless, once you have the knowledge and, assuming you have the funds, this approach is much better as you will take a greater slice of the revenue.
How Much Do You Need to Launch a Turnkey Online Casino?
Keeping in mind you are not having to invest in stock, starting an online casino is a lot cheaper than you might imagine.
The set-up fee
This will vary by platform and will sometimes be negotiable, particularly if you are promising a big marketing budget. The standard set-up fee is £5,000.
Thankfully there are not that many pages to design as much of it is templated and ready to go. I would budget £4,000 for the design and front end coding of the site. You will also need to budget for banners and other ongoing design work, this should cost you approximately £250 a month, or £3,000 for the first year.
Affiliate marketing costs
The affiliate marketing platform will cost circa £2,000 to get set up, but also budget £500 a month administration fees, or £6,000 for the year. Assuming you are acting as the “Affiliate Manager” you won’t need to pay for one.
If you are good at sales and building relationships, and you have the time, then it is better to do this yourself at first and you will learn how the world of affiliate marketing works. Assuming that you are looking for approximately £400,000 in player deposits from affiliates in the first year, I would estimate that you should be paying about £40,000 for that traffic.
A great place to meet existing affiliates and find new ones is at gambling affiliate conferences. The main ones are scattered across Europe though there are major regional events in the US, Asia and Africa. The travel costs obviously depend on where you live, but assuming you are in Europe the costs will be approximately £2,000 per conference, per person. I would go to three conferences in your first year, so budget £6,000 for the year, that covers flights, accommodation and entertaining. Once you are a bit more established, you could get a “stand” at the conference, this will make it significantly easier to meet new affiliates and build trust and awareness. Given that affiliates are the best channel you will have as a casino skin owner, it is a worthwhile investment, though at £8,000 upwards it isn’t cheap. A decent-sized stand will set you back around £20,000. The major players spend north of £200,000 on their stand and presence!
Other marketing costs
One consideration when choosing a turnkey platform is the licenses they hold as that will affect the countries you can market in using Google Ads or Facebook Advertising. Both Google and Facebook will only allow you to advertise in countries where online gambling is regulated and you or your platform holder has a license. Most turnkey platforms will allow you to market in “grey markets”. A grey market is where online gambling isn’t expressly forbidden in law, but also isn’t regulated with a licensing infrastructure. The benefit of a non-regulated territory is you aren’t encumbered by regulatory obligations or taxes, both of which can severely impact profits. The negative however is the limitations on marketing as even if it is unregulated, it is often illegal to advertise on any kind of mainstream platforms like TV, radio or sports sponsorship, and as said earlier, through Google and Facebook. The only channel left in grey markets is affiliates and some pockets of channels like adult advertising, display marketing and email databases.
How much you can spend is going to be limited by how many players you can bring in at an acceptable cost per player (also known in the business as CPA (cost per acquisition)). Once you have done your maths (and we will delve into that later), you will want to get as many players as you can in at that rate as you know that the average expectation financially is a positive one. Almost all the regulated countries you can target with Google Ads are going to be reliant on very good conversion rates and a slick campaign, assuming that something on the road to those two things are in place you should look to spend about £120,000 a year across all channels. Of course, you could spend a lot less or a great deal more, but that is roughly what you can spend before margins uncomfortably cut into.
If you know your way around the various online advertising platforms then you won’t need to hire a freelancer or an agency to manage the campaigns. In the event that you need to outsource the work, then you should add a 10% surcharge to your ad spend, or £12,000 (£120,000 * 10%).
You should also add a budget of circa £20,000 to try out other experimental channels. Either you know these already, or your marketing freelancer or agency does, or a new friend at a gambling conference revealed the secret source to you after one too many drinks. Failing those options you will need to build a network of contacts and start to mine them for information: a good place to start would be the people who work at the casino platform you choose.
Search Engine Optimisation (SEO)
SEO is the art of getting your website to rank highly on Google for the keywords that will produce paying customers.
Online gambling is one of the most competitive verticals for SEO, so unless you have a significant budget and a strong understanding of it, I would ignore this channel early on. The other issue is almost all of the turnkey casino platforms have SEO unfriendly platforms, and they are not going to make any changes just for you, assuming you even know what changes need making.
1st Year Costs Summary
Turnkey casino platform set up fee: £5,000
Turnkey casino platform yearly costs: £6,000
Logo, site design and front end coding: £4,000
Ongoing design costs: £3,000
Affiliate marketing platform set up fee: £2,000
Affiliate marketing platform monthly costs: £6,000
Affiliate fees: £40,000
Affiliate conference costs: £6,000
Other online marketing costs: £120,000
Online marketing agency costs: £24,000
Total first-year online casino costs: £216,000
Estimated new players acquired: 1200
Estimated income: £210,000
A £6,000 loss may seem disastrous, but a small percentage of your players will remain loyal to your brand and keep playing into year two. As the years progress, you will be creating layers of loyal playing customers and realise greater profitability.
Working Out How Much to Pay for a Player
As the owner of a turnkey online gambling site, your most important job is to know how much you can afford to pay to acquire players from any source. Here are some useful metrics to start with:
What % of players do you retain after 1 month, 2 months, 3 months, 6 months, 1 year and 2 years?
Casino players tend to skip from site to site a lot more frequently than bingo or betting players. You could have the best online casino site in the world, but if the player loses money (as is the tendency at an online casino!) they might decide you are an unlucky site and move on. Other types of players are “bonus hunters” and move from one brand to the next taking advantage of welcome bonuses, there is very little you can do to retain them. Unfortunately. it is impossible to spot a bonus hunter, a certain percentage of your players will be bonus hunters.
How good you are at analysing this or any other statistic is dependent on how good you are at arithmetic, if it isn’t your strong point, I highly recommend getting a friend or a consultant to help qualify the data you are seeing is reliable.
There is often huge variance in casino player values and so the only way to work out what average truly looks like is either vast amounts of data or a model that irons out variance. If this sounds complicated, find someone that can make sense of it as it is critical to ensuring you achieve profitability and don’t sink money into lost causes.
What is the average relationship between one-month deposits and six-month deposits?
This is a good way of being able to measure the quality of traffic from any channel. Usually the month one deposit value is 40% to 50% of the eventual total value, but it can vary from country to country and type of gambling traffic.
What is the average relationship between total deposits and your income?
You do need significant player volume for this to be meaningful as there is a significant variance when it comes to player deposit amounts. If you have one or two very big depositing players they can really skew the figures, it will be a good idea to strip out outliers in that case or to normalise the value of those outliers using a method like winsorising. Don’t take my word for it though, seek advice from a mathematics expert.
Once calculated, it’s a useful figure as you can quickly work out the estimated long term value for a month’s performance. It might be in that month you get great deposits, but a few players get lucky and you get a measly pay-out from the casino platform, by knowing the expected return you can look past any positive or negative variance. Unfortunately, players do win sometimes, but over time they will certainly lose more than they win and the return you get from their deposits will even out, in your favour!
Choosing a Turnkey Online Casino Platform
Below are the main online casino turnkey platforms, talk to them all so that you can compare their offerings and interrogate them on where they are heading. One of the most important questions will be what percentage of income they can offer you. This will be tiered, you can negotiate on the percentages as well as the tiers. Always push hard, if you cannot get a good deal then you will not have the margin to re-invest in the casino or worse, make a profit.
The leading turnkey online casino platforms:
Markor Technology – https://www.markortech.com/
Jumpman Gaming – https://www.jumpmangaming.com/
Progress Play – https://progressplay.com/
Regulated vs Unregulated Online Gambling Market
As a prospective online casino owner, you need to be aware of what player values are likely to be in different countries. This will be influenced by a variety of factors such as income levels and culture, but it will also be determined by law or the absence of it.
Countries around the world are slowly regulating online gambling in order to protect their citizens. The sophistication of that protection varies greatly, it is critical to get an insight into the impact of any regulation and keep up to date with where it is heading. Not to mention with regulation comes taxation.
In the UK, several measures have been implemented which make it particularly hard for anyone not enjoying economies of scale to find success. These include strict player affordability checks, banning deposits by credit card and removing pending withdrawals. The net effect of this is a severe reduction in the value of players. Unfortunately, there are still big players in the UK market that are doing well as they are better organised and more expert, those players are keeping the cost of marketing high, so it is not like the cost of marketing has dropped that much to reflect the new player value reality.
Nevertheless, there are regulated markets where the environment is still positive for the casino owner and plenty of unregulated markets like Japan, Norway and New Zealand where the player values are excellent relative to the cost of acquiring them.
Become a Casino Mogul Today!
So for only £216,000, a good grasp of numbers and some understanding of online marketing, you could be on your way to building a business that always wins. Just remember, sometimes players do win big at the casino! Over time and collectively, your players will always lose money to you, the trick is to make sure the money you make from these players isn’t less than the costs of running the casino and marketing. Good luck!